US sees modest summer gas prices

A government forecast suggests that gasoline prices will stay relatively low this summer because of continuing struggles in the economy. The average monthly price should top out at about $2.30 a gallon, well below the $4 spikes in 2008.
(Lisa Poole/Associated Press/File)

WASHINGTON - Gasoline prices are expected to be relatively low this summer, so motorists might want to take to the road despite the dismal economy if the federal government projections hold.

The Energy Information Administration said regular-grade gasoline is expected to average $2.23 a gallon during the April-through-September driving season, although it will likely fluctuate and could jump to more than $2.30 a gallon during the peak driving period in late summer.

But that's still a bargain compared with last summer, when gasoline cost an average of $3.81 a gallon.

Much lower crude oil prices, which are projected to average $53 a barrel this year after soaring as high as $147 a barrel last summer, are the primary reason for the lower prices at the pump.

Benchmark crude for May delivery lost 64 cents to settle at $49.41 a barrel on the New York Mercantile Exchange in afternoon trading yesterday.

The EIA report also said US crude oil production is expected to rebound this year by an additional 440,000 barrels, to 5.4 million barrels a day, after a decline last year. The production increase stems mostly from the startup of two huge new oil platforms in deep waters of the Gulf of Mexico. The Thunder Horse platform, which BP began operating late last year, is expected to pump more than 200,000 barrels a day, and Chevron's new Tahiti platform is expected to produce 125,000 barrels a day by midyear.

The additional production, however, is not expected to significantly change America's reliance on imports, which still account for about 58 percent of domestic petroleum use.

Howard Gruenspecht, the EIA's acting administrator, acknowledged the uncertainties surrounding the agency's price projections. Gasoline prices are largely linked to the price of crude oil and if the economy begins to recover earlier and stronger than assumed by EIA, prices of both crude and gasoline could be higher than projected, said the report.